Shocking Developments at the IRS

I came across more good news from the IRS today (well, Friday actually) and I'm not really sure what to do with myself. BNA reported late on Friday afternoon that Lisa McCaughey, a senior tax analyst with the Small Business/Self-Employed Division reported that the IRS is reducing the staggering number of audits they conduct each year of taxpayers who claim the earned income tax credit (EITC). Woohoo! In a speech during a low-income taxpayer clinic workshop of the American Bar Association Section of Taxation, McCaughey said "We are currently reducing the number of EITC audits we do overall. You might see it shift [downward] again next year." This is very good news indeed. It would be difficult for the IRS to conduct more EITC audits than they have in the recent past. We have highlighted the near obsession the IRS has with low-income folks who claim the EITC. In fact, IRS data shows that upwards of 40 percent of all audits they conduct are of EITC filers even though EITC errors only account for about 3 percent of the tax gap. What is going on over at the IRS? First they decide not to renew a contract for services that should be handled by IRS personnel anyway, and now they decide to reduce the number of EITC audits they conduct to focus on more efficient ways to close the tax gap. It's almost as if the influence of the current administration is waning a bit and the IRS is free to do things that are...you know...logical.
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